marketing management notes nust zimbabwe 2014

WELCOME TO THE MARKETING MANAGEMENT MODULE

LECTURER: MR J. RANGANAIOFFICE SD 17 (Business Management Dept)Email: [email protected]: 0772 122 120 /0713 421 422 /0733 236

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Marketing Management @ NUST 2014

Marketing & Marketing Management

Marketing consists of individual & organizational activities that facilitate & expedite satisfying exchange relationships in a dynamic environment through the creation,distribution,promotion & pricing of goods.


The Marketing Management Process

Marketing Management is the process of planning, organising,implementing & controlling marketing activities to facilitate & expedite exchanges effectively & efficiently.

ANALYSISCollect and analyse

marketingInformation

(Environmental scanning)

IMPLEMENTATIONResource allocation,

organising,programmes

MONITOR and CONTROLOutcomes

Set standards andMeasurements

PLANNINGTake decisions

about which consumersto satisfy and themarketing mix


Needs Wants and Demands

Needs ;- state of felt deprivation. Physiological needs, social needs, individual

needs for fulfillment. Most basic concept underlying marketing

Wants ;- desires shaped by culture and individual personality.

Demands ;- wants backed by purchasing power. Given their resources, people demand products

with the benefits that give them the most satisfaction.

Desire + Ability + Willingness + Authority = Effective Demand Desire – needs/wants Ability – have resources for exchange Willingness – want to spend the resources Have legal capacity to enter into exchanges.


Value and SatisfactionCustomer Value ;- the relationship between the

benefits the customer gains from owning and using the product and the costs of obtaining the product. Benefits can be functional and emotional Costs can be monetary (price), time & energy

costs. Perceived value the key to understanding customer

judgments e.g. Is Omo better than Sunlight?Customer Satisfaction ;- the extent to which a

product’s perceived performance matches a buyer’s expectations. Benefits of customer satisfaction include; (1) repeat

purchases, (2) less price sensitivity, (3) positive word of mouth to friends and thus customer loyalty.


Customer Relationships

Relationships - The process of creating, maintaining and enhancing strong, value driven relationships with customers. (Kotler; 2003).

Important to create mutually beneficial relationships because: Costs five times as much to attract a new

customer as it does to keep a current customer satisfied.

Losing a customer means losing the entire stream of purchases the customer would make over a life-time of purchases.

A happy customer normally tells 2 or 3 other people but a disappointed customer will normally inform 10 or more people.


Marketing Management Philosophies

*The orientations under which organisations may conduct their marketing activities namely:(i) Production Concept:Orgs that employ this concept assume that customers are only interested in the availability of products at lower prices such that marketing is not really necessary.(ii) Selling Concept: Companies oriented towards selling focus on selling whatever they make-They assume that customers will resist or are reluctant to purchase products or services not essential to them and therefore employ creative advertising and aggressive salespeople to overcome customer resistance/reluctanceMarketing Management @ NUST 2014


(iii) Product Concept: Premised or based on the belief that customers favour quality, performance or innovative featuresand will buy the high quality products if made available.(iv) Relationship Marketing Concept: Orgs that employ this concept aim @ benefitting by nurturing long terms relationships with customers.-It aims to enhance profitability by retaining customers such that the business benefits from repeat purchases/business.



(V) Societal Marketing ConceptIs one of the newest of the marketing management philosophiesIt focuses on satisfying both customer and societal needs*It aims to fulfil what society socially expects from business in terms of the three considerations which areSociety welfareCustomer satisfactionCompany profitsMarketing Management @ NUST 2014


(vi) Marketing Concept: Companies oriented towards the marketing concept firmly believe that the customer and the satisfaction of customer needs is key to organisational success.* Org places the customer needs at the heart of what it does and its activities are driven by the need to achieve the highest level of customer satisfaction*Pillars of the Marketing ConceptCustomer CentricityOrganisational Integration Mutually Profitable ExchangeMarketing Management @ NUST 2014

Recent Marketing Challenges and Developments

Rapid globalizationChanges in information technology and

electronic marketingIncome InequalitiesEthical and socially responsible marketingGrowth of non-profit marketingThe Powerful Customer


Concept of the Marketing Mix

* A combination of controllable elements that are used by marketers to satisfy their target markets & achieve their objectives.

The traditional marketing mix (4ps) consists of:-Product-Price-Promotion-Place


Characteristics of a good marketing mix

*The use of the words mix & combination in relation to the mkting mix are important in that the marketing mix can only be successful if the elements or the variables are well blended, integrated, flexible and consistent with each other. (i) Well-Blended: Means the elements must be optimally combined such that the marketer offers a quality product, whose price is consistent with the consumer `s perception of value, give it adequate promotional support and efficiently distribute it



(ii) Integrated: Means there must be synergy between the marketing mix elements and as such no element should be used in isolation. -For example a good product that is poorly promoted will fail. -Or the other way around, trying to use creative advertising to make up for a poor product will not work either. -Similarly, no matter the level of quality, a poorly priced product will fail



(iii) Consistent: the elements of the marketing mix must be consistent about what they say about the product. -If they are inconsistent, the consumer will reject the total offering(iv) Flexible: The marketing mix must be flexible such that it should be continuously altered and adjusted to align it with changes in customer tastes and preferences or any other changes that may alter the level of demand


Rethinking the Marketing Mix

The concept of building marketing strategy around the “4ps”has been the foundational principle of marketing which has served markets well for half a century.

Although the “4ps” marketing mix has endured for over a half-century, & continues to be the basis for many marketing strategies, overtime, there has been a progressively a groundswell of a push towards rethinking the bedrock principle (4ps marketing mix) in favour of including more variables or coming up with totally different models to drive competitiveness in markets as follows:Marketing Management @ NUST 2014

(1) Rethinking the Marketing Mix: the 7ps

*The drive in the trajectory of rethinking of the 4ps started with the inclusion of an additional 3ps (people, process & physical evidence) to the traditional “4 ps ” resulting in the marketing mix having “7 ps”

-Product - Price -Promotion -Place-People -Processes -Physical Evidence*The motivation for including the additional 3ps was

to improve the robustness & potency of the model (marketing mix) pursuant to dealing with the challenges of service marketing


(2) Rethinking the Marketing Mix:7 C’s

Scholars like Kotler have implored managers to relook at the marketing mix from the customer instead of the firm perspective thus focusing on the 7 Cs instead of 7 Ps

7 P’s Product

Price Place

Promotion People

Processes Physical Evidence

7 C’s Customer Value

Cost Convenience

Communication Consideration

Co-ordination & Concern Confirmation


(3) Rethinking the Marketing Mix: the SAVE framework

*According to Motorolla, in business to business markets, the “4ps”yield narrow, product-focused strategies that are increasingly at odds with the imperative to deliver solutions.

According to the org, its not that the 4 P’s are irrelevant, just that they need to be reinterpreted (to the SAVE model) in order to serve B2B markets well:

S- solutions (instead of products)A- access (instead of place)V- value (instead of price)E-education (instead of promotion)Marketing Management @ NUST 2014

(4) Rethinking the Marketing Mix: the new 10 ps

*Bhagat (2012) highlights the 10 new “Ps” as reflecting current thinking about marketing as follows:

i) Passion, Philosophy, and Purposeii) Predictive analysis: marketing

information, knowledge management etciii) People: stakeholder value, relationship

marketing and customer experiencesiv) Positioning: psychological value and

perceptions


4) Rethinking the Marketing Mix: the new 10 ps

v) Processes: value chain linkagesvi) Pricing: economic value to stakeholders;

dynamic pricing; negotiations. vii) Persuasion: communicating value to

stakeholders; integrated marketing communications; building & protecting brand and corporate equity

viii) Performance and Profits: Return on mkting & measuring mkting productivity.

viv) Philanthropy: CSR; economic, social, cultural, and environmental sustainability.

(x) Prescient Prescriptions: ethics, cultural sensitivity & technology in strategic planning.


(5) Rethinking the Marketing Mix: the SIVA framework

*Protano (2011) suggests a new model represented by the acronym SIVA:

Product → Solution Promotion → Information & IncentivePrice → ValuePlace → Access

*Protano `s model reflects a B2B thrust similar to that of Motorolla `s SAVE framework


(6) Rethinking the Marketing Mix: the “OVER” framework

*The 4 ps are “OVER”O- offer (instead of product)V- value (instead of price)E- experience (instead of place)R-relationships (instead of promotion)* Best relied on by company is creating and

selling either complex services or solutions


7) Rethinking the Marketing Mix: the new “4Es ” framework

*Brian Fetherstonhaugh at Olgilvy & Mather suggests the use of the 4 E’s:

i. Product → Experienceii. Place → Everyplaceiii. Price → Exchange iv. Promotion → Evangelism


7) Rethinking the Marketing Mix: the new “4ps ” frameworks

ProcessPeoplePlatformspartners

Purpose Passion Pain Power

PersonalityPublishing Packaging Physics

The above frameworks rarely make sense in terms of contrasting with the original “4ps” such that at best, they just reflect some attempts to repackage the 4 “Ps” while at worst they mirror the meaningless efforts of some people who want to be seen as having said or done something in this debate

of rethinking the marketing mix Marketing Management @ NUST 2014

Conclusion: Rethinking the Marketing Mix

Despite the suggestions towards rethinking the marketing mix, the model remains a timeless,valuable,simple (but effective) bedrock of mkting strategy especially in consumer markets where benefits are offered to customers through simple prdts

New additions /models like the additional 3ps (people, process & physical evidence) and SAVE & SIVA framework have shown potency in improving marketing strategy in service & industrial markets respectively.

The 7Cs can be very effective in relation to achieving a high level of customer centricity

The new 10Ps are a very comprehensive mkting strategy framework


THE MARKETING ENVIRONMENT

An assessment of the forces outside marketing that affect marketing manager’s ability to develop and maintain successful relationships with its target customers


Elements of the Marketing Environment

Macro-environment•Demographic•Political•Economic•Technological•Socio-cultural•Natural

Micro-environmentSuppliers, intermediariesAgencies, customers, competitors

Internal environmentResources, managementStructure, culture, policies, etc.


Importance of Understanding the Environment

Degree of dynamism ;- rate of change of factors in the environment.

Degree of complexity ;- the many and varied factors in the environment and their cross impact on each other.

Degree of uncertainty ;- as a result of the dynamism and complexity of the environment, marketing decisions and outcomes are made under conditions of risk.


Techniques for Analysing the Environment

External Environment Analysis PESTLEI Analysis Industry and Competitive Analysis

Internal Environment Analysis Resources and capabilities analysis McKinsey 7s Framework

Overall Situational Analysis SWOT Analysis


PRODUCT & SERVICES STRATEGY

The Marketing Mix


What is a product?

A product is anything that can be offered to a market for attention, acquisition, use, or consumption that might satisfy a want or need.

Businesses should think in terms of customer benefits instead of physical products and services to gain competitive advantage

A product has 4 levels: the core product, actual product, augmented product & expected product


Product Anatomy


Product Anatomy

Core Product: is the basic problem-solving benefit that consumers seek when they buy a product. e.g. transport, status, beauty & can be functional or psychological

Actual product: A product`s parts,styling,features,brand name, packaging and other attributes that combine to deliver and communicate the core benefits.

Augmented product: additional consumer services and benefits. e.g. warranty, repair services, training etc

Expected product: what the product could or should be in future. This includes possible ways of differentiating it form competitors


PRODUCT CLASSIFICATION

*Products can be broadly classified into consumer and industrial products.

Consumer products are those purchased for personal use and consumption by final consumers

Industrial goods are those destined for use in a production process in order to generate other goods and services


Types of Consumer Goods

Marketers usually classify consumer goods on the properties of durability, and customer shopping habits.


(a) Basis of durability

*Based on the properties of durability, goods can be divided into durable and non-durable goods as well as services

• Durable goods:• Non-durable goods• Services


(b) Classification on the basis of shopping habits

Convenience products: are bought frequently with minimum comparison and effort e.g. Bread, chocolates, newspapers... are usually low priced and intensively distributed.

Shopping products: are less frequently purchased, compared carefully on quality, price, style, suitability e.g. furniture, clothing, basic cars… are selectively distributed but given more sales support.

Specialty products: have unique characteristics and brand identification for some consumers who spend special effort to purchase e.g. specific brands and types of cars, Jewellery, designer clothing… e.g. Rolls Royce buyers do not compare cars, they only invest the time needed to reach the sellers.

Unsought products:Are consumer goods the consumer either do not know about or knows about them but does not normally think of buying them. Classic examples of unsought goods are life assurance policies, encyclopedias, blood donation & vasectomy


2.Industrial Goods

Installations: industrial products such as heavy equipment, buildings and new machinery which are relatively expensive and for long termAssessory equipment: industrial products that provides peripheral support to the production process without direct involvement e. g hand tools, forlift trucks, storage bins etc Raw materials: Primary industry output such as beef, cotton, milk, poutry,

soyabeans, copper,iron ore, in their natural state constitute raw materials.Component parts and materials: finished products of one producer that actually become part of the final products of another producerOperating supplies: Frequently purchased consumable items that do not become part of the product.eg lubricating oils, cleaning materials, floor polish, and stationery etc.They are the convenience goods of the industrial marketsBusiness services: intangible products that firms buy to facilitate their production processes e.g financial services, leasing services, rental services, insurance services, security, legal advice and consultancy


Product Decisions

*There are five important decisions to be made in the development and marketing of individual products;

a)Product Mix & Line Decisionsb)Product Attribute Decisionsc)Branding Decisionsd)Packaging Decisionse)Product-support services decisions


Product Attribute DecisionsProduct Attribute Decisions

Three attributes of importance to customers when selecting a product;

Product quality Involves a product meeting customer specifications in

terms of durability, reliability, precision, repair and other quality attributes valued by the customer

Product features Features differentiate a company’s products to those of

competitors. A company needs to know which features are valued by

the customers e.g. computer features, cell phone features etc.

Product design Design contributes to a product’s usefulness and

appearance. A good design can attract attention, improve product

performance and give a product a strong competitive edge


Product Mix & Line Decisions

* PRODUCT LINE• A product line is a group of products that are closely

related because of any of the following reasons:• they satisfy the same needs eg

shampoos,toothpaste,deodorants,soaps • They are used together eg cellophone accessories• They are bought by the same customer groups eg

stationery items bought by students• They are marketed through similar channels e.g

hardware products• They fall within the same price range e.g products

with a selling price of say between R10 and R15


Product Mix & Line Decisions

*PRODUCT MIXAlso known as an assortment, is a the set of

/combination of all product lines and items that a particular firm /reseller offers for sale

Or it is the combination of all various kinds of all products which a business makes/sells.


Example of a Prdt Mix and a Prdct Line: Unilever South East Africa

Washing Powders

Soaps Foodstuffs Personal Care Prdts

Omo Geisha Royco Ponds

Surf Lifebuoy Stock Brut

Sunlight Key Rama Sunsilk

Vaseline Flora Fair & Lovely Cream

Dove Knorr Axe

Lux Vaseline

Close-Up


BRANDING DECISIONS

A product brand is a name, term, sign, design or a combination of all them intended to identify the goods of a seller & differentiate them from those of competitors

A brand is a flag that signifies to the buyer what he has to expect in terms of quality, service and functionality


Brand Equity

Is the value of a brand. A powerful brand has high brand equity. Requirements for high brand equity:

High brand loyalty, High brand awareness High brand image Positive Brand Associations

Interbrand `s Top five global brands (2013) were (1)Apple (2) Google (3) Coca-Cola (4) IBM (5) Microsoft (6) General Electric (7) McDonalds (8) Samsung (9) Intel (10) Toyota

.


Branding Decisions

Major branding decisions area)Selecting the brand nameb)Finding a brand sponsorc)Identifying the brand strategyd)Repositioning the brand


a) Selecting the brand name

*A good brand differentiates the product communicates its benefits, suits the target market and marketing strategies.

*Characteristics of good brand names Must be internationally acceptable ie it should blend into various international cultures & should not be offensive.Must say something very positive about the core

product eg EconetCan be legally protected through registered trademarks


a) Selecting the brand name

*Characteristics of good brand namesThey must be distinctiveThey must be easy to pronounce e.g SonyMust be easy to remember such that short

names are preferable : (if long customers usually shorten themselves)

Must suggest quality e.g. Topics, Bakers` Pride


b) Brand Sponsorship

*A producer has four sponsorship options. The product may be sold

i. as a manufacturer’s (producer’s) brand,ii. to a reseller (middleman) who gives it a private brand

(who create and own the brand)iii. As a licensed brand (a company may be licensed to sell

its products under another company’s brand) iv. As a co-brand (two companies combine their brands and

create a new one).


(c) Brand strategy

A company has four choices; (i) Line extension; using a successful brand name to

introduce additional items in an existing product category under the same brand name, such as new flavors, forms, colors, added ingredients, or package sizes.

(ii) brand extension; using a successful brand name to launch a new product in a new category.

Helps the company introduce new product categories more easily, provides instant recognition and acceptance, decreases advertising costs.

But may be dangerous if it fails, because it may tarnish the company’s whole image


(c) Brand strategy

(iii) Multi-brands; a strategy under which a seller develops two or more brands in the same product category e.g Unilever (Geisha,Lifebuoy,Lux & Dove)

(iv) New brands; introducing new brand names in new product categories.

Demands lot of company resources, that is why, nowadays some companies use megabrand strategies - spending resources only on brands that can achieve the number one or two market share position in their categories and dropping the weaker brands.


Branding Strategy AlternativesBranding Strategy Alternatives

Product Category

Existing New

Existing Line BrandBrand Name extension extension

New Multi-brands New

brands


d) Repositioning the brand: Rebranding

Rebranding is the creation of a new name, term, symbol, design, or a combination of them for an established brand with the intention of developing a differentiated (new) position in the mind of stakeholders and competitors.

Corporate re-branding is defined as “the practice of building a new a name representative of a differentiated position in the mind frame of stakeholders and a distinctive identity from competitors


d) Repositioning the brand: Rebranding contd

*Corporations often rebrand in order to respond to external and/or internal issues that include:

Need to differentiate from competitors e.g FBC Holdings Align brand with international positioning e.g Telecel

Zimbabwe Shedding a negative image e.g Renaissance Bank to Capital

Bank No enhance market appeal e.g Express to Jet Rebranding As part of corporate restructuring e.g Zimbabwe Broadcasting

Holdings To reflect a new ownership structure e.g Murray & Roberts to

Masimba Holdings /CFX to Interfin Bank ,TN to Steward rebranding

To refresh the brand e.g Toppers Uniforms rebranding To potray a new image e.g ZABG to Allied BankMarketing Management @ NUST 2014

Packaging DecisionsPackaging Decisions

*The activities of designing and producing the container or

wrapper for a product. Packaging Functions Protecting the product and maintaining its functional

form. To protect consumers from product tempering e.g.

use of plastic sealing. To offer convenience to shoppers e.g. pasteurised

packaging that does not require refrigeration, small single serving tins to minimise waste…

To promote the product by communicating its features, uses and benefits.

Re-usable packages can be developed to make the product desirable e.g. ice cream containers as food storage containers.


Product-Support Services

The product-support services augment the actual product, can help the product to gain a competitive advantage and create customer loyalty.

The company should periodically survey its customers to assess its customers’ satisfaction and to get new ideas for product improvements.

E.g. services to handle complaints, credit, maintenance, technical issues, customer information.


SERVICES MARKETING

*Are intangible activities, benefits and satisfaction that are offered for sale.

*Services can be classified on the basis of provider or on the basis of the levels of customer contact.


(a) Classification of the basis of provider

Governmental services - courts, hospitals, police, fire departments, postal services, schools etc;

non-profit organization `s services - museums, colleges, services by NGOs

business organizations `services - airlines, hotels, restaurants, advertising, real estate etc.


(a) Classification of the basis of level of customer contact

Contact Level

Explanation

(i) High Contact Services

Customers visit the service setting so that they are personally involved throughout the service delivery process e.g a hair cut,dentist `s services etc

(ii) Medium Contact Services

Customers visit the facility but not remain for the duration of the service delievery e.g delivering & collecting items to be repaired

(iii) Low Contact Services

Little or no contact between customer or service provider.Service is delievered from a remote location often through electronic means e.g social networks,radio & television entertainment etc


Characteristics of Services

1.Intangibility Services do not have physical features that

buyers can see, touch, feel, smell or taste before the purchase decision.

Service firms essentially ask their customers to buy a promise

2. IninventorabiltyServices cannot be stockpiled for later use or sale.

Because of this characteristic, unused capacity cannot be stored for future use. For example, spare seats on an aeroplane cannot be transferred to the next flight.



3. Inseparability Production & consumption of services take place simultaneously. Because services are real time experiences,

services providers have to get it right first time as correction of a service blunder is impossible.

Further because of the inherent characteristic of simultaneity in production & consumption, the client has to avail themselves at the point of service provision



4. Inconsistence (variability) Service quality is usually not the same every

time because of the labour intensive nature of services.

The quality of the service depends on the morale, motivation, mood, training and attitude of those providing the service.

For example, there is a strong possibility that the same enquiry would be answered slightly differently by different people (or even by the same person at different times)



5. Involvement of other peopleOther people other than the service providers may be involved in the service setting thus affecting the quality of service provided for example a bank customer may queue with other customers before being served(6) 6. Non-OwnershipA service as a nonmaterial equivalent of goods does not result in ownership and this is what differentiates it from providing physical goods.


Strategies to deal with unique characteristics of services

The unique characteristics of services impose the need for marketers to come up with strategies to deal with the challenges.(i)IntangibilityDevelop a tangible presentation of the service which

implies high service quality eg cheque books, credit cards,calenders

Offer tangible benefits in sales promotions eg when hotel occupancy rates are low offer say free breakfast.

Ensure high quality physical evidence like outlets design, surroundings, and staff uniforms etc because it gives a good impression of service quality to consumers

Use third party endorsements eg by credible high status people



(ii) IninventorabilityUse of discounts to ensure usage of service during off peak hours e.g mobile phone tariffs can be lowered say between 12 midnight and 6amEducate customers to use service during non peak hours(iii) Inconsistence Set service standards eg the telephone should be answered within a certain number of secondsOffer adequate training to personnel so that variability is minimizedEmployees should be well motivated by way of both monetary and non-monetary methodsBenchmark your processes with those of the best service providers internationallyMake sure employees are aware of values,mission,vision etc



(iv) Inseparability: Use technology to bridge the inseparability gap eg internet banking such that the consumer doesn’t need to visit the bank or online distance education such that the student doesnt need to be physically on campus(v) Involvement of other peopleIncrease the number of service delievery channels to avoid inconveniencing customers eg a bank can increase the number of service counters, ATMs and use electronic banking platforms like internet, sms and telebankingUse of agents for example insurance companies can use brokers to minimize congestion at the own premises.



(vi) Use of service blueprints.A service blueprint is a graphical illustration of the

service process. It is a sequential illustration of the stages involved in

the service process. Pursuant to improving service quality, a service

blueprint helps managers to identify points potential points of failure or where improvements can be made to improve service quality.

(vii) Use of an expanded marketing mixTo improve service quality, managers have to harness

the additional variables of people, process and physical evidence to improve service quality.


NEW PRODUCT DEVELOPMENT

Because of the rapid changes in consumer tastes, technology,

and competition, companies must develop new products and

services. A firm can obtain new products in two ways; • acquisition; buying a whole company, a patent, or a

license.• new-product development; developing original

products, product improvements / product modifications and new brands.

• Strategic alliances


Importance of New Products

Keep up with changes in consumer tastes.Adapt to new technologiesTo stay ahead of competitionTo widen the company’s product mix and thus growth

and profitability.New products spread the marketing risk.

*Despite the importance of new products, many researches

indicate that over 70% of all new products fail within 2 years of launch. What are the likely reasons for such failures?


New Product failure: Causes

*New Product failure is a very real and very common phenomenon. There are many reasons for new product failure and some of the more commonly cited include:

Poor planning: incorporates issues such as developing a product that doesn’t fit a company’s strategy, competencies and/or distribution strength

Poor test market research: the failure of New Coke in 1985 is a classic example of how poorly executed test marketing can lead to product failure



Legislation: unfavorable legislation may lead to the failure of a new product eg Dasani, a Coca-Cola Company mineral water drink was stopped by the French gvt because it had a high level of bromate level

Poor Market Analysis: failure to properly analyze the market to understand whether and what type of opportunity may exist in a category and what specific unsolved problems consumers have

Improper blending of marketing mix elements: such as overpricing of a product, for example, the entry price for Mazda 929 was too high



Competition: the activities of competitors can lead to product failure. For example IBM killed several laptop models they had developed because competitors introduced better and more advanced machines to the market before IBM could get there.

Unconducive organizational climate: new product failure is sometimes traced to organisational factors like poor organizational culture, lack of mngt support and inadequacy of resources to support the new product `s strategy.



Poor timing of launch: Too early or late entry into the market is a common cause of failure. Kinetic Merlin was launched in India in June 1991.It was a 3 in 1 set consisting of a colour television, a stereo with detachable speakers and a home computer.

Poor product concept: a new product that lacks a compelling consumer benefit, is a simple me-too item with no real and relevant difference from items already available is bound to fail.



Kainotophobia: Kainotophobia means fear of change and thus resistance to it. It is this fear of various risks of associated with unknown products that makes customers reluctant to adopt them.

Poor execution: failure to properly execute the marketing plan and achieve targeted levels of distribution, as well as failure to achieve appropriate display and retailer support, all contribute to new product failure



Poor Product PositioningPoor or inconsistent qualityInsufficient differentiation from existing

offeringsBranding blunders e.g black catRapid change in the economy just after the

product is introduced eg an economic recessionPoor estimates of the market potential of the

new productNon-delievery of promised product benefitsImproper channels of distribution selectedMarketing Management @ NUST 2014

Types of New Products

*Seven types of new products exist•Products which are new and original in every respect e.g. the first telephone when it was introduced by Alexander Bell in 1876• Important alterations of existing products so that they differ significantly from the current products e.g. smartphones/high definition flat screen TVs•Products which are new to the firm but not quite new to the market eg if Apple starts making cars, the products would be new to the firm (Apple),but not quite new to the marketMarketing Management @ NUST 2014

Types of New Products

• Products which are quite new to the target market but not new to the firm.

• New according to the law: for example a product that has been on the market for less than 12 months(Zimbabwe) or less than 6 months (USA)

• Additions to product lines: line extensions, flankers so on

• Repositionings: Products retargeted for new uses or applications


New Product Development

Is the development of original products, products improvements, product modifications, and new brands through the firm`s own R & D efforts.

NDP in companies is carried out as a process which consists of 8 major steps which are as follows:


New Product Development ProcessStage Tasks to be Undertaken

1. Idea Generation

•Systematic search for new ideas

•Org has to generate may ideas in order to find few good ones.

•Major sources of NP ideas include customers, competitors, employees, senior management, channel members, scientists etc

2. Idea Screening •Ideas are evaluated to identify good ideas and drop poor ones as soon as possible.

•In screening of ideas, companies take care to a void both drop and go errors.

•Org needs to consider 3 categories of risk, i.e strategic, market & internal risk.

3. Concept Development & Testing

•Turn surviving ideas into concepts by developing a detailed version of the product idea in meaningful consumer terms

•Testing involves asking a sample of consumers what they feel of the product concept before turning it into actual product.


New Product Development Process

Stage Tasks to be undertaken

4. Marketing Strategy Development

•Describes the target market, planned product positioning, the potential sales, market share and profit goals for the first year.

•Outline the planned long-run sales, profit goals and marketing plan for a given time-frame.

5. Business Analysis •Involves reviewing, (1) projection of sales, (2) costs and (3) profit (ideally cash flow) for the new product to see whether it satisfies the company’s objectives

6. Product Development and Testing

•Product concept is developed into a physical product (prototype) to see if the idea can be turned into a workable product

•Developed prototype is then tested under laboratory and field conditions to make sure the product performs safely and as expected.


New Product Development Process

Stage Tasks to be Undertaken

7. Test Marketing •Testing the product in realistic market conditions

•Company is able to judge product acceptability, effectiveness of marketing strategy, customer reaction before going into full production.

8. Commercialization

•If market testing returns with positive results, then the firm commercializes/launches the product in the entire market•For a product launch to be successful, questions of when, where, how and to whom should guide the marketers.

•Commercialization/launch brings us to the last stage of the NPD process but however introduces us to the first stage of the product life cycle


Product Life Cycle Concept

Time

ProductDevelop-

ment

Introduction

Profits

Sales

Growth Maturity Decline

Losses/Investments ($)

Sales andProfits ($)


PRODUCT LIFE CYCLE CONCEPT

After launching a new product, management wants it to enjoy a long and rewarding life, although it does not expect the product to sell forever.

The product life cycle (PLC) is the course that a product’s sales and profits take over its lifetime. It has five stages;1. Product development begins when the company develops a

new-product idea. During product development, sales are zero and the company’s investment costs mount.

2. Introduction is a period of slow sales growth as the product enters in the market. Profits are low or nonexistent in this stage because of the heavy expenses of product introduction.

3. Growth is a period of rapid market acceptance and increasing profits.

4. Maturity is a period of slowdown in sales growth because the product has achieved acceptance by most potential buyers. Profits level off or decline because of increased marketing

outlays to defend the product against competition.5. Decline is the period when sales fall off and profits drop.


Product Life Cycle Concept

Time

ProductDevelop-

ment

Introduction

Profits

Sales

Growth Maturity Decline

Losses/Investments ($)

Sales andProfits ($)


STAGES OF THE PRODUCT LIFE CYCLE

Introduction Growth Maturity Decline

Sales Low Rising/Increasing

PEAK Declining

Average Costs High Falling Increasing Rising

Profits Negative Or Low Rapidly Increasing

Peak To Declining Declining

Typical Customers Innovators Early Adopters &Early Majority

Late Majority Laggards

Competitors(Number Of Firms & Products)

One Or A Few Few Bt Increasing High Number Of Competitor

Low Number Of Competitors


Introduction Stage Characteristics

Sales revenue is likely to be low because many potential customers may be unaware of the product and its benefits

Costs are very high at this stage because of high distribution and promotional costs being incurred

The higher costs coupled with low sales revenue make the introduction stage a period of low or negative profits

There may be one or a few competitors at this stage

The New Product at this stage is typically bought by innovators


Marketing Strategy @ Introduction Stage

*Goal of the marketing strategy is to establish a market and build primary demand for the product.Product – usually a basic product is offered to the marketPrice – Either a skimming or penetration pricing strategy is employed.Distribution is selective High promotional expenditure aimed at building brand awarenessMarketing Management @ NUST 2014

Growth Stage Characteristics

Sales increase as more customers become aware of the product and its benefits & additional market segments are targeted

Average costs fall as promotional and distribution costs are spread over a larger volume of output

Higher sales on the backdrop of falling average costs results in an increase in profits in this stage.

The new product at this stage is typically bought by early adopters and early majority

Attracted by the opportunities for profit, more competitors enter the market


Marketing Strategy @ Growth Stage

*Goal of strategy is to gain consumer preference and increase sales.Product - New product features &packaging options to improve product quality.Price is maintained at a high level if demand is high, or reduced to capture additional customers.Distribution becomes more intensive.Promotion - Increased advertising to build brand preference.Marketing Management @ NUST 2014

Maturity Stage Characteristics

Sales reach their peak at this stage, while they continue to increase, they do so at a slower pace

Costs increase as firm vigorously defends market share against competitors

The triad of increased of increased costs, price reductions and slowdown in sales growth results in profits being at peak or mostly declining.

The product at this stage is typically bought by the late majority

This stage is characterized by high number of competitors and competitive products.


Marketing Strategy @ Maturity Stage

Primary goal of strategy is to maintain market share and extend the product life cycle

Product - modifications are made and features are added for differentiation.

Price - Possible reductions in response to competition while avoiding a price war.

Distribution - new distribution channels & incentives to resellers in order to avoid losing shelf space.

Promotion – Emphasises differentiation & building of brand loyalty. Incentives to get competitors' customers to switch to company brand.


Decline Stage CharacteristicsSales decline as the market becomes saturated,

the product becomes technologically obsolete, or customer tastes change.

Unit costs may increase with the declining production volumes and eventually no more profit can be made.

Decline in sales on the backdrop of rising unit costs results in a corresponding decline in profits

As falling profits make the industry unattractive, producers leave the industry resulting in a low number of competitors and products

The product at this stage is typically bought by laggards


Marketing Strategies @ Decline Stage

During the decline phase, the firm generally has FOUR options in relation to the PRODUCT.• Maintain the product without changing it in the hope that competitors will exit

the market.• Harvest the product by reducing costs (advertising, sales force) hoping to

improve sales margins• Divest the product either by liquidation or selling it off to another company• Reposition the product to extend its useful life e.g by rebranding Price - Prices may be lowered to liquidate inventory of

discontinued products. Prices may be maintained for continued products.

Distribution - Distribution becomes more selective with channels that no longer are profitable being phased out.

Promotion - Expenditures are lower and aimed at reinforcing the brand image for continued products.


Limitations of the PLC Concept

The term "life cycle" implies a well-defined life cycle as observed in living organisms, but products do not have such a predictable life and the specific life cycle curves followed by different products vary substantially.

Consequently, the life cycle concept may not be well-suited for the forecasting of product sales.


Limitations of the Product Life Cycle Concept

Further, critics have argued that the product life cycle

may become self-fulfilling. -For example, if sales peak and then decline,

managers may conclude that the product is in the decline

phase and therefore cut the advertising budget, thus precipitating a further decline.



According to Kotler & Armstrong (2006),using the PLC Concept to develop marketing strategy can also be difficult because the PLC is both a cause and result of the marketing strategy



According to Brassington and Pettitt (2003), It is difficult to predict when the key transition periods from one stage to the next will happen, yet this is critical information for planning strategy changes. The problem is that the shape of the PLC is affected by many things. It is not only the pace of change but the organization `s handling of the product throughout its life.



*However despite all the criticisms, the PLC Concept remains a key theoretical framework that guides manager in marketing strategy formulation a product progresses through various stages of its life


Diffusion of Innovation:Definition

Is the rate at which a new product is adopted in the market

Customers usually do not adopt a new product at the same time. Some quickly adopt a new product while others are a bit resistant to change and only adopt a new product later when it will have been tried and tested or only when it becomes the last resort.


The Consumer Adoption Process

In the adoption process, consumers go through a series of stages from learning about the new product to trying it and deciding whether to purchase it regularly or to reject it. The stages in the consumer adoption process can be classified as follows:

a)Awareness: Individuals first learn about the new product, but they lack full information about it

b)Interest: Potential buyers develop interest in the product and begin to seek information about it


Stages in the Consumer Adoption process

a) Evaluation: They consider the likely benefits of the product

b) Trial: they make trial purchases to determine its usefulness

c) Adoption/Rejection:If the trial purchase produces satisfactory results, they decide to use the product regularly


The Product Adoption Curve

Rogers (1962) came up with The Product Diffusion Curve a theoretical framework that groups customers according to how quickly they adopt a new product.


Adopter GroupsAdopter Group

Description

Innovators Very knowledgeable grp of customers who are willing to take risk by being the first to try a new and unproven productAre only a small group (represent the first 2.5% to adopt the new product) & are the earliest to buyTend to be younger, better educated, more confident & are wealthy enough not to worry too much if the product doesn't work. Important in the earliest stages of the PLC to get the product off the ground & start the process of gaining acceptance as they are influential.

Early Adopters

Members of this group gauge the response of the innovators before rushing in to purchase a new product. Buy early (after the innovators) and are contend to let the innovators take real pioneering risks with a new product.They represent about 13.5% of the total consumer population.Once early adopters enter the market, the growth stage of the PLC starts developing


Adopter Groups

Adopter Group Description

Early Majority Represents 34% of the total consumer population,are relatively well educated & careful consumers who tend to avoid risk associated with purchasing an unproven product.Adopt the product once it has been proven by the early adopters. Rely on recommendations or product endorsements from others who have experience with the product

Late Majority Somewhat skeptical consumers who acquire a product only after it has become commonplace.Less interested and bothered about the product / are contend to wait until they see how the market developsRepresent about 34% of consumers.


Adopter Groups


Factors affecting Rate of Adoption

(i) Relative Advantage: the greater the perceived value possessed by a new product,the quicker it is likely to be adopted.

(ii) Compability: Adoption is quicker if the new prdt is consistent with current use & practice.

(iii) Complexity: speed adoption is hindered by products that are difficult to understand & use.

(iv) Divisibility: Adoption is stimulated if customers can sample the product in a part of their operations or sample it for a limited period.

(v) Risk: The greater the risk attached to a prdt,the more reluctant buyers will be to try it.

(vi) Communicability: Where prdt performance can be seen or easily demonstrated,adoption is facilitated.


Usefulness of the Product Diffusion Curve

The Product Diffusion Curve`s strong links with the PLC makes it a useful tool in formulating marketing strategies for new products

The Product Diffusion Curve as a model guides you as to who you should be targeting at different stages of the life of your product or service i.e. whether its innovators, early adopters, Laggards etc


PRICING PRODUCTS

MARKETING MANAGEMENT


PRICE

*Money or any other considerations exchanged for ownership/use/consumption or enjoyment of a product.*Importance of Pricing DecisionsPrice relates directly to the generation of revenue and

ultimately profits which are the life-blood for an organization's survival.

Is a variable that a marketer can change quickly to respond to changes in demand or to actions of competitors.

Can be used symbolically to communicate about the product.

*Price can be viewed from marketing, customer & societal perspectives


Factors affecting pricing decisions

Nature of the product e.g. whether luxury or necessity, industrial or consumer product etc

CostsCompetitionCompany Objectives i.e profit

maximization/sales maximisation/growth /survivalMarketing Objectives e.g market shareGovernment PoliciesLevel of Demand Stage of product in its PLCNature of the market e.g in terms of purchasing

power & price sensitivityMarketing Management @ NUST 2014

Factors affecting pricing decisions

Market Structure Product` intended positioningPrevailing economic fundamentals e.g

inflation, interests rates etc


Pricing Objectives

*Expectations that specify the role of price in an org`s marketing & strategic plans. They include:

1.Sales Revenue maximization2.Sales Volume Maximization3.Profit maximization4.Market Share5.Quality leadership6.Survival7.Social Responsibility


Pricing Methods/Approaches

1.Cost Oriented Approaches2.Profit Oriented Approaches3.Demand Oriented Approaches4.Competition Oriented Approaches


1.Cost Oriented Approaches

*Price setter stresses the cost side of the pricing task (i) Standard Mark up Pricing: involves adding a certain percentage of the cost to arrive at a price(ii) Cost-Plus Pricing: Involves calculating/estimating the total unit cost of producing a product & adding a specific amount to the cost to arrive at a price for a given product(iii) Marginal Cost Pricing – Price set in line with the cost of producing an extra unit of a product-allows for pricing flexible & variable pricing structure e.g on a flight from Harare to Bulawayo – provided the cost of the extra passenger is covered, the price could be varied a good deal to attract customers and fill the aircraftMarketing Management @ NUST 2014

2.Profit Oriented Approaches

*Price setter is guided by a certain desired profit level pursuant to setting a price:

(i)Target Profit Pricing: firm sets an annual target for a specific dollar volume of profit

(ii)Target Return on Sales Pricing: Firms such as supermarkets often use target return on sales prices that will give them a profit that is a specified percentage say 10% of sales revenue

(iii)(iii) Target Return on Investment Pricing: firms such as public utilities use target return on investment pricing in order to set prices that will achieve a ROI target such as a percentage mandated by the directors or regulators


3.Demand Oriented Approaches

*Price of a product is based on the extent and nature of its demand by customers e.g

(i) Skimming Price Strategy: Selling a product at a higher initial price to take advantage of high income innovators, to quickly recover cost of R & D or position a product as high quality

(ii)Penetration Pricing StrategyLaunching a product at a low price to garner market share

the increase the price substantially once org gains foothold in the market

‘Low’ price to secure high volumesTypical in mass market products – chocolate bars, food

stuffs, household goods, etc.Suitable for products with long anticipated life cyclesMarketing Management @ NUST 2014

3.Demand-Oriented Approaches

(iii) Price Bundling Offering a product, options and customer service for one total price.May unbundle,ie breakdown price & allow customers to decide what they want to purchase among other reasons(iv) Psychological PricingUsed to play on consumer perceptions based on the consumer’s emotive responses, subjective assessments and feelings towards specific figures.

*Odd-Even Pricing - Odd numbers convey a bargain image -- $.79, $9.99, $699*Even numbers convey a quality image -- $10, $50, $100*Multiple-Unit Pricing – 3 for $.99 suggests a bargain and helps increase sales volume.Marketing Management @ NUST 2014


(v) Prestige PricingInvolves setting a high price so that quality or

status conscious consumers will be attracted to the product

e.g Rolls-Royce Cars, Rolex watches(vi) Target PricingMostly used by manufacturers, this strategy is

based on estimating the price the customer is willing to pay for the product.

The producer then works backwards through marks taken by intermediaries to determine what price to charge to the wholesaler/immediate agent



vii) Price DiscriminationThe practice of charging different prices for the

same product for reasons not related to production costs.(viii) Value Based pricing Pricing a product based on the perceived value

and not on any other factor. Perceived value is made up of several elements ,

such as the buyer’s image of the product performance, channel deliverables, warranty, quality, customer support, supplier’s reputation, trustworthiness etc


4.Competitor-Oriented Approaches

*Rather than focusing demand, cost or profit factors, a firm relies on competitor/market prices as the benchmark when setting prices e.g

(i) Loss Leader Pricing: This is when retail stores deliberately sell a product below its customary price to attract customers in hopes that they will buy other products as well, particularly those with higher mark ups (ii) Predatory Pricing: A firm set a very low price for one or more of its products with the intention of pricing competition out of the market.Illegal in most countries but predation is difficult to proveMarketing Management @ NUST 2014


(iii) Going Rate PricingFirm follows the pricing leads of rivals especially where those rivals have a clear dominance of market shareIn case of price leader, rivals have difficulty in competing on price – too high and they lose market share, too low and the price leader would match price and force smaller rival out of market.(iv) At, above or below the market pricingUsing the competitors` average price or market price as the benchmark, a firm then may deliberately choose a strategy of above-at-or below the market pricing e.gMarketing Management @ NUST 2014


(v) TenderingMany contracts awarded on a tender basisFirm (or firms) submit their price for carrying out the workPurchaser then chooses which represents best valueMostly done in secret


MANAGEMENT OF PRICING

Concept of price elasticity of demandMaking special adjustments to prices


Concept of price elasticity of demand

Any pricing decision must be mindful of the impact of price elasticity

The degree of price elasticity impacts on the level of sales and hence revenue

Elasticity focuses on proportionate (percentage) changes

PED = % Change in Quantity demanded/% Change in Price


Concept of price elasticity of demand

(i) Price Elastic: % change in quantity demanded > % change in pricee.g. A 50% rise in price would lead to sales falling by something more than 50%Revenue would fallA 33% fall in price would lead to a rise in sales of something more than 33% thus Revenue would rise(ii) Price Inelastic:% change in Q < % change in Pe.g. a 50% increase in price would be met by a fall in sales of something less than 50% Revenue would riseA 33 % reduction in price would lead to a rise in sales of something less than 33 % thus Revenue would fallMarketing Management @ NUST 2014

Special Adjustments to prices

Firms allow flexibility in their pricing models by through special adjustments to prices that result in different customers paying different net prices.

DiscountsAllowancesGeographical adjustments


Discounts

Deductions from the list price that the seller gives to the buyer for some form of activity that is favorable to the seller e.gQuantity discount-to encourage purchase of larger quantitiesSeasonal Discounts- to encourage buyers to stock inventory earlier than their normal demand would requireTrade Discount-to reward intermediaries for channel functions they performCash Discount-to encourage early settlement of bills Marketing Management @ NUST 2014

Allowances

Trade in allowance: is a price reduction given when a used is part of the payment on a new product.An effective way to lower the price that a customer can pay without formally reducing the list price.Promotional Allowances: Reduction in price for undertaking certain channel activities like advertising or selling activities.


Geographical Adjustments

These are adjustments made by manufacturers /wholesalers to list or quoted prices to reflect costs such as transportation & insurance e.g FOB,CIF,CF etc


DISTRIBUTION (PLACE) STRATEGY

Channel Management and Channel Design Decisions


What is Place / Distribution?All activities that focus on making sure the

product is available to the customer at the right place, at the right time in the right form

An order fulfillment function of the marketing mix comprising the distribution channels and physical distribution (Logistics)

Distribution activities should support the org`s marketing strategy and ensure that customers derive time, place, form and assortment utilities


The Role of Distribution

Driving growthOrder fulfilmentMarket coverageCustomer serviceRelationship and reputation buildingEnsure consistent availabilityConvenienceCustomer satisfactionLogistics efficiency – Transport, inventory

management, order processing.


Distribution ChannelsThe route that a product follows from the

manufacturer to the final intended consumer.

Thus distribution channel levels can be direct (zero channel level) or indirect distribution (multi-level channel)

ProducerMiddlemen /Distributors /

Dealers

Consumer

Producer Consumer


Producer uses strategies to reach end users/consumers without going through any intermediary.

*Examples of Direct Distribution Channels Producer Consumer

Producer Business User

Service Provider Consumer/Business User

Distribution Channels contd


• The firm prefers direct interface with customers

• If special technical advice is needed e.g. industrial equipment manufacturers

• If the product is highly perishable e.g. flowers/services

• Where there is need to maintain personal relationships with customers.

• Where specialist skills are involved e.g. auditing/legal services

Circumstances which impose the need for a direct channel


• Where after sales service is important and is best provided by the manufacturer.

• To complement indirect channels of distribution

• Where there is need to dispose sub-standard goods

• To maximise profits by eliminating intermediaries

Circumstances which impose the need for a direct channel


Producer relies on intermediaries in distributing products and services to final consumers/users.

• Examples of Indirect ChannelsProducer Wholesaler Retailer Consumer

Producer Retailer Consumer

Producer Agent /Broker Wholesaler Retailer Consumer

Service Provider Agent /Broker Consumer/Business User

Indirect Channels of Distribution


*A considerable number of factors impact on the selection of a distribution channel such that the final distribution channel as follows;

(i) Product attributes• Perishable products are typically sold through

shorter channels.• Complex products are often sold directly to

customers• Services, because of their inseparability nature,

are mostly sold directly to customers

Factors influencing the choice of a distribution channel


*(ii) Market CharacteristicsConsumer / Business marketsConcentrated / dispersed market

(iii) Organisational ObjectivesThe objectives being pursued by an

organisation can influence its choice of a distribution channel

• e.g. where the company wants to achieve higher market share it can try & maximize on distribution



(iv) Competition• Org may use same channels used by competitors

as they are relevant as well as to ensure visibility of products alongside those of competitors.

• Org may also opt for a shorter channel relative to competition in order to achieve the highest possible level of customer satisfaction in relation to customer utilities.

• Some orgs may develop new distribution channels to remedy inadequate promotion of its products by intermediaries who may have strong links with competitors



*(v) Organizational Factors • Factors specific to the org also influence the

choice of a distribution channel, e.g a production oriented firm may need the marketing expertise of its intermediaries to offset its own lack of such skills OR

• A company with adequate financial, management and marketing resources may feel little need for help from intermediaries and therefore distribute its products through a network of company owned outlets



(vi) Degree of control requiredIf an org,desires a high degree of control over the marketing of each products, it has to rely on direct distributionUse of many indirect forms of distribution means firm has surrendered some control over the marketing of its products



What are Middlemen/Channels of Distribution?

A group of individuals and organisations that direct the flow of products from producers to customers (Pride and Ferrell et al 2005)

Middlemen can be retailers,wholesalers,brokers or agents


BuyingSellingRisk taking

TransportationSortingStoring Assorting

FinancingGrading Marketing Information & research

The Functions of Middlemen (Distributors)


Key Distribution Channel Decisions:

1.Understanding the different types of intermediaries

2.Selecting the right type of intermediary to use3.Deciding on the level of market coverage

required4.Managing intermediary relationships


Levels of Market Coverage*Intensive distribution An approach to market coverage that involves

making the product available in as many outlets as possible.

Typically used for convenient goods where producers aim at enabling purchasers to buy their products with minimum efforts.

Suits products with a wide appeal across broad groups of consumers e.g. soft drinks

Usually employed in the growth & maturity stages of PLC


*Selective Distribution An approach to market coverage whereby a

limited number of outlets in a specific geographical area stocks a firm`s products.

By limiting the number of intermediaries reduce marketing costs are reduced while establishing strong working relationships in the channel.

Typical for shopping goodsUsually employed in the introduction & decline

stage of the PLC for new products

Levels of Market Coverage


*Exclusive DistributionA producer practices exclusive distribution

where it grants exclusive rights to an intermediary to sell its products in a given geographical area.

Marketers sacrifice total market coverage for the product in order to develop and maintain an image of quality and prestige for the product.

Limits marketing costs since the firm deals with a small number of intermediaries

Typical for highly priced speciality goods

Levels of Market Coverage


Which specific organisations to use?

CapabilityNumber of outlets & locationReputation & ImageAccessibilityResourcesCompatibility – technology, culture, policies,

stock mgmt,Business terms Market share & performanceCo-operationMarketing Management @ NUST 2014

Management issues include:-Training and motivating channel membersGaining cooperation and minimising conflictEvaluating channel member perfomance

Managing Intermediary Relationships


Arises when one channel member`s action prevents the channel from achieving its goal (Kotler & Keller: 2005)

Horizontal conflict: occurs among firms at the same level of the channel, e.g. Holiday Inn franchisees might complain about other Holiday Inn franchisees over-charging guests or giving poor service, hurting the overall Holiday Inn image.

Vertical Conflict: conflicts between different levels of the same channel, e.g a furniture maker may create conflict with its dealers if it opens an online store selling its products directly to customers

Channel Conflict


Marketing Logistics ;- a system of efficiently and effectively making and getting products and services to customers.

Involves the process of planning, implementing and controlling the cost effective flow and storage of materials, in-process inventory, finished goods and related information from point of origin to point of consumption for the purpose of conforming to customer requirements.

The Marketing Logistics Network


Physical Distribution;- A set of activities consisting of order processing, materials handling, inventory management and transportation used in the movement of products from producers to consumers and users.

Objectives of Physical Distribution To manage the costs of physical distribution to

acceptable levels so as to ensure profitability. To ensure effective customer service by ensuring

product availability, promptness and quality. The process calls for cost/service trade-off, that

is; the trade off in costs involved when deciding on the service level to be offered to customers.


1. Order Processing ;- the receipt and transmission of sales order information.

Involves three main tasks;- Order entry – the placement of purchase orders

from customers or sales people by mail, telephone or on-line

Order handling – checking customer credit, verifying product availability and preparing products for transportation

Order delivery – selecting the transport mode most suitable for a desired level of customer service

Tasks of Physical Distribution


2. Materials Handling ;- physical handling of the product and involves the coordination of packaging, loading and movement systems taking into account the need for both cost reduction and customer requirements.

3. Warehousing ;- the design and operation of facilities for storing and moving goods.

4. Inventory Management ;- the development and maintenance of sufficient assortments of products to meet customer needs.

Decision involves balancing between stock-outs and inventory holding costs.

5. Transportation ;- adds time and place utility to a product by moving it from where it is made to where it is needed.


ConclusionDistribution management involves coordinating the

activities of the whole supply chain to deliver maximum value to customers

It involves managing distribution channels (middlemen) as well as the physical distribution interface.

Physical distribution functions account for about one-third of all marketing costs and have a significant impact on customer satisfaction.

Therefore, effective marketers are actively involved in the design and control of the distribution strategy so as to meet customer changing needs and preferences.


PROMOTIONAL (MARKETING COMMUNICATIONS) STRATEGY


What is Promotion/Marketing Communication?

*Any form of communication used to inform, persuade & remind ppleof an org 's goals, goods, sevices,image, community involvement or

impact on society. Elements of the Marketing Communications/Promotional Mix(i) Advertising:- Any paid form of non-personal communication about

org & its products that is transmitted to the target market thru the mass media.

(ii) Sales Promotion:- a variety of short term incentives to encourage trial or purchase of a product or service.

(iii) Public Relations & Publicity:- a variety of programmes designed to promote or protect a company’s image or its products

(iv) Direct Marketing:- use of mail, telephone, e-mail or the internet to communicate directly with or solicit response or dialogue from specific customers or prospects.

v)Personal selling:- face-to-face interaction with one or more prospective purchasers for the purpose of making presentations, answering questions and procuring orders


What is Promotion/Marketing Communications?

Elements of the Marketing Communications/Promotional Mix

(vi)Interactive marketing:- online activities and programmes designed to engage customers and directly or indirectly raise awareness, improve image or elicit product sales.

(vii) Word of mouth marketing:- people to people oral, written or electronic communications that relate to the merits or experiences of purchasing or consuming a product or service.


The strategic role of Marketing Communications

Create or increase awarenessCreate interest & cultivate desireMotivating purchasing action (induce behaviour)Create, enhance & restore corporate imageEncourage brand loyalty & discourage brand

switchingEducate consumers & other stakeholdersInform consumers & other stakeholders about

products, prices, courses of action, changes, community activities

Positioning & Influence attitudesMarketing Management @ NUST 2014

1) ADVERTISING2) SALES PROMOTION

3) PUBLIC RELATIONS & PUBLICITY4) DIRECT MARKETING5) PERSONAL SELLING

6) INTERACTIVE MARKETING7) WORD OF MOUTH MARKETING

Elements of the Marketing Communications/Promotional Mix


1. Advertising

*Any paid form of non-personal communication about the org and its products that is transmitted to the target market through the mass media.

Five critical decisions of advertising: 5 Msa)Mission: What are the advertising objectives? b)Money: How much can be spent? c)Message: What message should be sent? d)Media: What media should be used? e)Measurement: How should the results be evaluated?


(a) Setting the Advertising Objectives (Mission)

(i) Output objectives are what the firm ultimately wants to achieve, like higher sales, repeat purchase,market share, and brand loyalty

(ii) Intermediate objectives relate to hierarchy-of-effects models and include awareness (inform),presuade,remind and reinforce which respect to a product.


(a) Setting the Advertising Objectives

(ii) Intermediate ObjectivesTo inform

Telling the market about a new product Suggesting new product uses Explaining how the product works Correcting false impressions Building company image

To persuade building brand preference Encouraging brand switching Persuading buyers to purchase now


(a) Setting the Advertising Objectives

(ii) Intermediate Objectives To remind

Reminding buyers where to buy the product Maintaining a top of the mind awareness Reminding the buyers that the product may be

needed in future To reinforce

Convince purchasers that they made the right choice

Ensure customer satisfaction and repurchase


Setting the Advertising Objectives

(iii) Illustrative Advertising ObjectivesSpecific advertising targets to be achieved

within an indicated time frame e.g To increase repeat purchase of Munchee chocolate bars from 30 to 50 percent among 10- to 16-year-old boys by April 2013


(b) Deciding on the Advertising Budget (Money)

Management should consider these five factors when setting the advertising budget:i.Product life cycle stageii.Market share and consumer baseiii. Competition and clutter iv. Advertising frequency v. Product substitutability


Approaches to setting the advertising budget

(i) Competitive Parity method: firms base their budgets on competitors’ spending per market share point.

(ii) Percentage of Sales method: The advertising budget is set a percentage of sales.

(iii) Objective & task method: firm sets advertising objectives, identifies the necessary tasks,

estimates the budget for each task, then adds up the total cost


Approaches to setting the advertising budget

(iv) Research approach: Here advertising budget is argued for and presented on the basis of research findings.

(v) Affordable: advertising budget set at a level the

company think they can afford.(vi) Residual: advertising budget based on

what is left after allocating for other organisational tasks & activities.


(c) Creating the Advertising Message (Message)

• Advertising campaigns vary in their creativity.

• Advertisers and their agencies must be sure their “creative” advertising does not overstep social and legal norms.

*Advertising message creation comes in two major forms ;

I. Rational approaches.II. Emotional approaches.


(i) Rational approaches

Demonstration: Brands are presented in a problem solving context which focuses on their performance.Comparative: Direct Comparison with competitor brand e.g brand x is compared favourably on two or three main attributes with a leading competitor. Factual: messages provided in a rational, logical and straightforward manner. Slice of life: Uses pple who are similar to the target audience,presenting them in scenes that the target audience can readily associate with & understandRefutational Appeals: A special case of two-sided advertising that explicitly mentions competitors claims, but then directly refutes them.


(i)Rational approaches

*One-sided and Two-sided appeals One-sided appeals are most effective when

the target audience is less educated and feels positive about the product.

Two-sided appeals are more effective when the audience’s initial opinion is not necessarily positive and the audience is educated and/or sceptical.


(ii) Emotionals Appeals

*Advertising approaches appealing to emotions.The main styles are:

Humour-based-effective @ creating awareness, sets a positive tone, and enhances memory, but if improperly crafted may distract from the core message.

Fear-based- Fear appeals creates anxiety, behaving as the advertising suggests removes the anxiety

Celebrity endorsement-based. Advertisers often use well-known people to endorse products, especially on TV


(ii) Emotionals Appeals

(Storytelling: Storytelling can be a very effective way of appealing to people’s emotions.

Animation: Used to reach children and as a way of communicating potentially boring & uninteresting products (gas,insurance) to adults.

Sex: excellent for getting the attention of the target audience,but if the product is not related (e.g perfume,clothing) these ads generally do not work.

Music: Good because of subliminal effect as well for getting attention & differentiating brands.


(d) Developing Media Strategies (Media)

After creating the message, the next task is to choose media to carry it.

When deciding which type of media to use – known as an advertising medium – a business needs to consider the following factors.


Factors affecting media choice

Reach of the media – national or local; number of potential customers it could reach

Nature of the product – the media needs to reflect the image of the product or should be appropriate to the product

Position in product life cycle – launch stage will need different advertising from products undergoing extension strategies

Cost of medium & size of advertising budget – e.g. local newspaper advertising is cheaper than radio, which in turn is cheaper than TV.

Effectiveness of the media – the final medium chosen should be effective given the task @ hand

Message Characteristics –timeliness & info content influence media choiceMarketing Management @ NUST 2014

(v).Evaluating Advertising Effectiveness (Measurement)

Good planning and control of advertising depend on measures of advertising effectiveness.

Advertisers should try to measure the communication effect of an ad—that is, its potential effect on awareness, knowledge, or preference—as well as the ad’s sales effect.

Advertisers should try to measure the sales-effect of advertising


(2) Personal Selling

Communicating with the target market through personal interaction in an exchange situation.

Involves use of the company’s own sales personnel (sales reps, key account managers, sales consultants, sales engineers etc.

*Role of the sales forcea)Identifying and qualifying prospectsb)Presentation and demonstration of a company’s

offering (product)c)Negotiationsd)Closing a salee)Follow-up and maintenance to ensure customer

satisfactionf) Developing relationships.


(3) Direct marketing

Communicating with customers without use of middlemen.

Includes use of E-mail, direct mail,telemarketing, catalogues

Factors fuelling the growth of direct marketing include; technological developments,demographic & lifestyle changes,product quality improvements,improved delivery systems etc


(4) Public Relations

PR involves a variety of activities designed to promote or protect a company `s imagine or its individual products.-Most org have PR depts that monitor the attitude of the org `s publics & distributes info & communications to build goodwill.*PR departments perform five functions:(a)Press Relations: presenting news & info about the org in the most positive light.(b)Corporate Communications: Promoting understanding of the org thru internal & external communicationsMarketing Management @ NUST 2014

(4) Public Relations

(c) Lobbying: Dealing with legislators & gvt officials to promote or defeat legislation.(d) Counselling: Advising management about public issues,company positions & image during good & bad times.

(e) Publicity: Non-personal stimulation of demand for a product, service or business unit by generating commercially significant news about it in published media or obtaining favourable presentation of it on radio, television or stage.Marketing Management @ NUST 2014

(4) Public Relations (e) Publicity: Businesses cannot wait around for the news to

present opportunities. They must also try to create their own news thru some of the following techniques:

Be involved in a activity that enhances the environmentPublish a reportTake a stand on a controversial subjectAnnounce an appointment/acquistionInvent and then present an awardStage a debate / Arrange a speech or talk Organize a tour of your business or projectsEvent sponsorshipConduct a poll or survey


(5) Sales Promotion

Is a short term promotional technique designed to improve sales by way of inventive to customers,trade partners and sales people.

* Factors affecting sales promotionCost of promotional undertakingConsistence with the brand imageLong term effectiveness of the promotion


Sales promotions directed @ customers

Money off coupons – customers receive coupons, or cut coupons out of newspapers or a products packaging that enables them to buy the product next time at a reduced price

Competitions – buying the product will allow the customer to take part in a chance to win a prize

Discount vouchers – a voucher (like a money off coupon)

Free gifts – a free product when buy another productLoyalty cards –where customers earn points for

buying certain goods or shopping at certain retailers – that can later be exchanged for money, goods or other offers


Sales promotions directed @ trade partners

• Price-Off (off-invoice or off-list): A straight discount off the list price on each case purchased during a stated time period.

• Allowance: An amount offered in return for the retailer’s agreeing to feature the manufacturer’s products in some way.

• Free Goods: offers of extra cases of merchandise to intermediaries who buy a certain quantity or who feature a certain flavor or size


Concept of Integrated Marketing Communication

• It encompasses all the promotional mix elements in combination to provide clarity, consistence and maximum communication impact.

• Rather than consisting of separated marketing communication elements with no unified control, the IMC approach regards each of the business `s promotional elements as part of a whole ,each of which offers a different means to connect with the target audience

Ensures use of all communication tools some being the key ones for any activity and others assuming a supportive role.

All tools must project the same message (consistency) and reinforce each other in the market


Steps in Developing Integrated Marketing Communication

Identify the target audience – will affect the marketer’s decisions on what will be said, how it will be said, when it will be said, where it will be said and who will say it.

Determine the response sought (objectives) ;- based on the hierarchy of effects model.

Develop the IMC budget;- how much will be spent in the communication.

Design an effective message;- ideal message should get Attention, hold Interest, arouse Desire and obtain Action (AIDA)

Select media to use ;- decide on personal communication channels (sales reps, consultants) vs. non-personal channels (newspapers, radio)

Select the message source ;- who will deliver the message e.g. celebrities, doctors, models etc.

Collect feedback ;- assess effect of the message on target audience.


Conclusion

• As highlighted,the marketing communications mix consists of five major modes of communication: advertising, sales promotions, public relations and publicity, personal selling and direct marketing.

• Managing and coordinating the entire communications process calls for integrated marketing communications (IMC), that combines the various communications mix to provide clarity, consistency and maximum impact through the seamless integration of discrete messages.


UNDERSTANDING MARKETS

MARKETING RESEARCH,CONSUMER BEHAVIOUR,MARKET

SEGMENTATION, TARGETING, AND POSITIONING FOR COMPETITIVE

ADVANTAGE


MARKETING RESEARCH

*Is the systematic design, collection, analysis and reporting of data relevant to a specific marketing situation facing an org. Marketing Research Process

Defining the

problem and

research objectives

Developing the

research plan for collectin

g informati

on

Implementing the

research plan

Interpreting and

reporting the

findings


Importance of Marketing Research

Supports marketing efforts towards ensuring that the org `s marketing mix is reflective of environmental imperatives.

Ensures successful NPD for many product classesIs a prerequisite for a successful market

development initiatives.Provides info that helps marketing managers

interpret past performance as well as plan future activities.

Provides timely,actionable & accurate information on consumers,competitors & their brands.


Defining Consumer Behaviour

The decision processes and physical activities consumers engage when evaluating, acquiring (obtaining), consuming/using or disposing goods and services OBTAINING CONSUMING OBTAINING

•How you decide you want to buy•Other products you consider buying•Where you buy •How you pay for product•How you transport product home

•How you use the product•How you store the product in your home•Who uses the product •How much you consume•How product compares with expectations

•How you get rid of remaining product•How much you throw away after use•If you resell items yourself or through a consignment store•How you recycle some products


WHY STUDY CONSUMER BEHAVIOUR?

Marketing concept remains one of the best practices of marketing.

To stay in business by attracting and retaining customers.To benefit from understanding consumer needs.Designing marketing strategies that create competitive

advantage.Consumers do not always act or react as theory suggests.Need to segment, target and position is line with

consumer behaviour imperatives.To sell products that might not sell easily.It helps them gain insights as to why a consumer behaves

differently to another consumer; as well as, why a consumer behaves differently in different times and buying situations.


Consumer Decision Making

Consumer Decision Making pertains to making choices/choosing courses of action regarding product and service offerings.

Consumer decision making involves a continuous flow of interactions among environmental factors, cognitive and affective processes and behavioural actions.


Consumer Decision Making Process

1. Need /Problem recognition 2. Pre-purchase information search

3. Evaluation of alternatives

4. Purchase decision

5. Post-purchase outcome and reactions


1.Need Problem Recognition

Is a stage of perceiving a deficiency/need which can

be triggered off by an internal or external stimuli.

Can be simple or complexCan result when the Actual State (AS) or

Desired State (DS) changes


2.Pre-Purchase Information Search

After a need is recognized, the consumer goes for an

Info search, so as to be able to make the right purchase decision by gathering info about the

product category & the various alternatives available.Can be specific, ongoing or incidentalInfo sources can be in internal or external


3.Evaluation of Alternatives

Once the consumer has gathered info and identified the alternatives, s/he compares the different alternatives available on certain criteria like economic e.g

price value assessment or behavioral e.g need/motivation,

lifestyle etc or functionality. In relation to generation of alternatives,a consumer moves

from evoked/consideration set towards the choice set as follows:

Evoked Set Inept Set Inert Set Choice Set


4.Purchase Decision

*After the consumer has evaluated the various alternatives, he selects a particular brand.

Consumer purchases may be: Trials/First purchaseRepeat purchases


5. Post purchase outcome and reactions

The post purchase outcome and reactions contains

two stages; Stage I: Post purchase Cognitive DissonanceThis is a feeling of tension and anxiety that a consumer experiences after the purchase of a

product. A feeling of uncertainty with respect the

performance of the product and begins to doubt their purchase decision i.e

“whether the decision was the right one?”.


Post Purchase Cognitive Dissonance

The intensity of anxiety is likely to be greater where:

The decision is an important one psychologically or financially.

There are a number of forgone alternatives.The forgone alternatives have favourable

featuresThe product cant be returned


Stage II: Product usage and reaction

After the purchase, the consumer uses the product and

re evaluates the chosen alternative in light of its

performance relative to expectations. This phase is significant as it; (i) acts as an experience and gets stored in the

memory;(ii)(ii) affects future purchase decisions (iii)(iii) acts as a feedback. Marketing Management @ NUST 2014

Conclusion: Consumer Decision Making

It is important to note that the five stage decision making process is not so simple; it is complex. The decision making process is an interplay of reactions amongst a consumer cognition, affect and behaviour on the one hand, as well as the environmental forces on the other hand.Further, the decision making process may not always proceed through all the five stages; it would vary across (i) the nature of the product (ii) the purchase situation (emergency or planned or

routine); (iii) the personal characteristics of the consumer etc


Marketing Management Implications: Consumer Decision Making Process

An understanding of the consumer decision making process, can help a marketer formulate appropriate marketing strategies by modelling the marketing mix accordingly.

The management implications of understanding the dynamics of consumer behavior are discussed as follows:


Need Recognition

-A marketer can create an imbalance between the actual and desired state; to trigger of the purchase decision process.

-Launch newer models; marketing communication has a big role to play.

-can activate a need through communication (advertisements, sales promotion, point-of-purchase stimuli, opinion leaders and reference groups).


Pre-purchase information search

Marketing communication has an important role at this stage. –

Marketer can identify the sources of info that the people generally access & use these to present info about his product and service offering.

The marketer should provide the right kind of info at the right place and at the right time.

Marketer must make sure that his/her product is part of the evoked /consideration set.


Evaluation of alternatives

The marketing manager should be careful that his product is:

i) positioned and promoted well; ii) is readily available and displayed well; iii) the product features prominently in the

evoked/consideration set; and, iv) s/he highlights those attributes and benefits

that are regarded as most important to the consumers, and which they are most likely to evaluate while selecting an alternative.


Purchase Decision

Stock the product at the right place at the right time so that the consumer who has made a decision in favour of the brand can have access to the product

For trial and first time purchases marketers should encourage trials through market testing, or thru promotional tactics such as free samples, coupons etc

For repeat purchases: i) the marketer should make sure that s/he has

satisfied the customer at the first time. ii) that his/her offering is a part of the

evoked/consideration set. *Org should aim towards creation of brand loyalty.


Post-purchase outcome and reactions

*Marketer can play an important role in reducing the dissonance that the consumer faces reassurance that the choice made was the right one.

i) Marketer can communicate with the customer about the various attributes/features and benefits that the product has to offer in comparison with other alternatives.

ii) Follow up with the customer and address queries and concerns if any (eg. follow up calls).

iii) Marketers’ assurances with respect to warranties, guarantees and exchange can also pacify the cognitive dissonance state.

iv) Company websites with FAQs ; satisfied customers’ comments and customer care information (eg. toll free numbers etc) can also prove to be helpful


Factors that affect Consumer Behaviour

Marketing Mix Influences

Psychological variables

Socio-cultural influences

Situational Influences

ProductPricePromotionPlacePhysical EvidenceProcessPeople

Motivation

Personality

Perception

Learning

Attitude

Social ClassCultural InfluencesReference groupsOpinion LeadershipFamily Influences

Purchase TaskSocial SurroundingsPhysical SurroundingsTemporal EffectsAntecedent States


In marketing, a market is the set of all actual and potential buyers of a product or service. A market consists of people with a need/want, ability,

willingness and authority to transact. Markets are defined by needs & not products.


Markets

*Three types of markets, based on needs can be identified:

(I) Existing Markets: These are markets where customers are satisfied with existing products.

When newcomers enter, they compete on price, promotion & place than by offering new benefits.

These markets approach commodity-like competition, margins are low & there are few differences between products

Types of Markets


(ii) Latent Markets Before a market materializes, it exists as a latent

market.This is a market consisting of customers with

defined need(s) that have not been met by competitors.

E.g for centuries people have always wanted faster means of calculation & the market has progressively satisfied this need with abacuses,slide rules,adding machines & advanced scientific calculators.

Products that meet latent needs represent significant improvements over previous ones

Types of Markets contd


(ii) Incipient MarketsThese are based on needs that customers have but

do not know them until a product or service appears that triggers recognition of certain needs e.g the sony walkman

Such mkts appear more frequently than managers imagine.

Customers are not proffessional innovators and,not suprisingly,are often myopic in imagining new & innovative products

Products that meet incipient needs change customer behaviour & create new markets where non previously existed

Types of Markets contd


*Other than needs,markets can also be classified on the basis of other factors such as:

(a)On the basis of end user (Consumer & Organisational markets)

(b)On the basis of physical distance from firm`s location i.e local,regional and international markets.

(c)Sector specific markets e.g equities & money markets (financial sector) & other different types of markets in sectors like insurance,transport & agriculture etc

Other classification of markets


1. Market segmentation; dividing a market into distinct groups of buyers with different needs, characteristics or behaviors who might require separate products or marketing mixes.

2. Selecting target markets; evaluating each market segment’s attractiveness and selecting one or more of the market segments to enter.

3. Market positioning; setting a clear, distinctive competitive positioning (difference) for the product in the minds of the customer and developing a detailed marketing mix.


Target Marketing Process

*Why Segment Markets?To achieve the highest possible level of

customer satisfaction.Better matching of customer needsEnhanced profitabilityRetain customersEffective targeted marketing communication.Economy in marketing communication

expenditure

Market Segmentation


The major variables are;Geographic segmentationDemographic segmentationPsychographic segmentationBehavioral segmentation


Bases for Segmenting Consumer Markets

Companies may divide the market into different geographic units such as nations, regions, cities, climate…

A company must pay attention to the geographical differences in needs and wants.


Geographic Segmentation

Companies divide the market into groups based on; Age and life-cycle: needs and wants change with age,

that is why, a company may use different marketing approaches for different age and life-cycle groups.

Gender: is mainly used in clothing, cosmetics, and magazines. Ciders such as Spin, Reds, Storm are targeted to women, whereas Black Label beer is for the hardworking men.

Income: is mainly used for cars, houses, clothing, cosmetics, financial services, and travel.

Other ;- variables include, family life cycle, occupation, education and religion.


Demographic Segmentation

Companies may divide the market into different groups based on;◦ Social class: has a strong effect on preferences in cars,

clothes, home furnishings, leisure activities, store choice Rolls Royce cars targeted to people of higher social class.

◦ Lifestyle: person’s pattern of living as expressed in his or her activities, interests and opinions. Foods with low fat, diet etc. are targeted to buyers who

believe in a healthy lifestyle◦ Personality: mainly used for cosmetics, cigarettes, and

liquor. Marlboro is targeted to the macho man with its macho

Cowboy image.


Psychographic Segmentation

Companies may divide buyers into groups based on their attitudes, uses or responses to a product. Occasions: buyers can be grouped according to

occasions when they buy or use an item. Coca Cola is for “Always”, gift cards for valentines,

birthdays, Christmas… Benefit sought: buyers can be grouped according to

the benefits that they seek from the product. Usage rate: markets also can be segmented into

light, medium, and heavy user groups.


Behavioral Segmentation

After segmenting the whole market, the firm has to evaluate these segments and decide how many and which ones to target.

In evaluating different market segments, a firm must look at three factors:


Market Targeting Evaluating Market Segments

◦ Segment size and growth; companies try to select the segment with “right size and growth rate /prospects” for themselves. Large companies prefer to target segments with large

current sales, a high growth rate, and a high profit. Small companies prefer to target smaller segments

◦ Segment structural attractiveness; a segment may have the right size, but not offer attractive

profits ◦ Company objectives and resources; a segment

should be be compatible with the long-run objectives of the company & its resource endowments


Market Targeting Evaluating Market Segments

The company must then decide which and how many segments to serve, in other words, the company must decide which targeting strategy to adopt.

There are four targeting strategies: undifferentiated marketing differentiated marketing concentrated marketing Customized marketing


Selecting Market Segments

(i) Undifferentiated MarketingA targeting strategy in which a firm decides to ignore market segment differences and goes after the whole market with one marketing mixHere, the offer focuses on what is common in the needs of consumers rather than on what is different. Products that can be marketed successfully through undifferentiated marketing include staple food items such as salt & sugar as well as certain kinds of farm produce


Targeting Strategies

(ii) Differentiated MarketingMost common targeting strategy today in which a firm decides to target several market segments and designs separate offers (marketing mixes) for each.

E.g. Nike offers athletic shoes for different sports such as athletics, aerobics, cycling, baseball, basketball, tennis…

These companies hope for; Higher sales through product and market

variations A strong position within each market segment More loyal customers because the firm’s

offerings match each segment’s desires better.Marketing Management @ NUST 2014


(iii) Concentrated Marketing: A targeting strategy in which a firm focuses on serving the needs of a particular customer group (niche) in a given marketRollce-Royce the high-end car marketSuitable for a small company to achieve a strong market position in the segment (or niche)Involves higher-than-normal risks because;

The target may not respond Larger competitors may decide to enter the same market. The market may take a down-turn and company has no

alternative to turn to.(iv) Customized marketingProducing one-off products/services to match a specific

customer’s requirements, e.g. a made –to-measure suit / according to customer specifications



Once a company has decided which segments to enter, it must decide what “positions” it wants to occupy in those segments.

A product’s position is the place the product has in consumer’s minds relative to competing products.

In other words, a product’s position is the set of perceptions, impressions, and feelings that consumers hold for the product compared with competing products. E.g. Toyota is positioned on economy, Mercedes on luxury and

status, BMW on performance etc


Positioning for Competitive Advantage

*Marketers can position (differentiate) their products on;

Product attributes: Product features: Samsung Galaxy phones have excellent

product features Product performance - Omo offers better whiteness Style,design /Atmosphere - Greens Supermarket has unique

store ambiance Service attributes: a product can be differentiated

by its speedy, convenient or careful service delivery Image: a company may establish an image different

from competitors e.g. Sony, Motorola “quality image”. Personnel: an org can hire better people than

competitors


Positioning Variables

Benefits: a product’s benefit can be differentiated e.g. Microsoft software is user friendly

Usage occasions: a product’s position can be positioned according to the time of using the product e.g. Kellogg cereals for breakfast.

User category: a product can be positioned for some people e.g. Johnson & Johnson’s baby shampoo, Black label beer for hard working men…

Price: a product can be differentiated by using its price. The product would be having the lowest price in the market e.g. Southwest Airlines

*After the company selects the right position for itself, it must

communicate and deliver the chosen position with promotions.


Positioning Variables

INDUSTRY AND

COMPETITOR ANALYSIS AND STRATEGY


Levels of Competition

Brand Competition - All companies offering similar

products, to similar target markets, utilizing similar technology and exhibiting similar degrees of vertical integration - e.g. OK vs. TM vs. Shoprite; Econet vs. Net one vs. Telecel; CBZ vs. Standard Bank vs. Barclays Industry Competition - All companies operating in the same product group - e.g. bank vs. building society,.

Form Competition - All companies supplying products that satisfy the same need (substitutes) - rail vs. road vs. air transport

Generic Competition - All companies competing for the same spending power - e.g. Estate Agent vs. Car dealer

NB – Focus will be on the first three levels of competition.


Industry Analysis

An industry is a group of firms that offer a product or class of products that are close substitutes for one another.

An audit or assessment of an industry sector is done to determine competition structure, competitive forces strategic groups and competitor variables through various techniques of analyzing industry attractiveness.

Techniques for Analyzing Industry Competitiveness

Porter’s Five Forces ModelStrategic Group AnalysisCompetitive BenchmarkingMarketing Management @ NUST 2014

Market Level Competitor Analysis

An audit of all present & potential industry rivals who intend to satisfy the same needs in the market.*Competitor Analysis Framework(i) Competitor Identification; The starting point in competitor

analysis is identifying existing as well as potential competitors(ii) Competitor Assumptions; The assumptions that a

competitor`s managers hold about their firm & their industry help define the moves they are likely to make

(iii) Competitor Objectives; Knowledge of a competitor objectives facilitates a better prediction of the `s competitor`s reaction to different competitive moves

(iv) Competitor Strategies; Knowledge of the competitor`s strategy ensures that the firm will craft a strategy that aimed at outperforming competition

(v)Competitor Capabilities; competitors be analysed according to its strengths & weaknesses in functional areas


Competitor Information

Sources of Competitor Info Getting Competitor Info

ReportsTrade showsIndustry expertsMediaEmployeesCustomersCompetitorsDistributorsSuppliersGovernment

Marketing ResearchCompetitive intelligenceObservationGhost ShoppingCompetitor employeesDirect inquiries (customers, suppliers, competitor employees)Social interactionsReverse engineering


How Competitors Compete (Market positions)

LeadersChallengersFollowersNichers *How these strive to survive in the market

can be resembled to a war situation where each party is fighting for supremacy and survival - hence the term ‘Marketing Warfare’


Market Leader Strategies

Market leader is the firm with the largest market share in the relevant product market.Generally leads other firms in price changes, new product introductions, distribution coverage etc. To maintain leadership, market leaders can use two strategies

Expanding total market share Protecting its current market share through

marketing warfare.


Expanding Total Market Share

Can be done through two action programmes• Identifying new product users and increasing usage –

involves attracting new buyers through;Market penetration strategyMarket development strategy

• Identifying new uses e.g. Vaseline Petroleum Jelly started out as a lubricant in machine shops, but has evolved to become a skin ointment, a healing agent, use in hair dressing etc.


Marketing WarfareDefensive Strategies for Leaders

Position defense;- involves building a superior brand power, making the brand almost impregnable e.g Samsung, Microsoft, Coca-cola etc.

Flank defense;- involves erecting outposts to protect a weak front E.g. developing new products to counter possible competitor moves.

Pre-emptive Defense;- best form of defense is attack. Can be through; Making small sustained attacks on challengers. Grand market development to cover all market segments Send out signals of a ruthless retaliation if attacked.


Marketing WarfareDefensive Strategies for Leaders

Counter-offensive defense;- involves quick retaliation after an attack. An effective counter attack is to invade the attacker’s main

territory so that it has to pull back some troops (resources) to defend the territory.

Mobile defense;- leader stretches market coverage by moving into new areas through market broadening and market diversification to avoid relying on one segment or market.

Contraction defense;- strategic withdrawal from weaker territories and re-assigning resources to stronger territories. Occurs when the market leader recognises that he can no

longer defend all his territories effectively..


Marketing Warfare Strategies for Challengers

Looks at strategies used by second or third placed firms who aspire for the leadership position e.g. PepsiCo, Telecel and Net One etc

The aim is to topple the leader.Challenger must decide whether;-

To attack the market leader – high risk but potentially high pay-off strategy

To attack firms of its own size Attack small local & regional firms.


General Attack Strategies for Market Challengers

Frontal attack;- The attacking man goes head to head with its competitor, matching the competitor in every category i.e. from product all the way to distribution channel.

Flank attack;-Rather than going straight for a competitor `s position of strength with a frontal assault, a firm may attack a part of the market where the competitor is weak e.g. geographic areas or segments where the opponent is under-performing

Encirclement attack;- involves launching a grand offensive on several fronts to weaken the opponent. aim is to attack the various segments and

strategies used by the opponent from all angles e.g. Komatsu against Caterpillar.


General Attack Strategies for Market Challengers

Bypass attack;- indirect assault as it involves by-passing the enemy (market leader) and setting up bases in easier territories. Can be achieved through; Diversifying into unrelated products or new

geographic markets or technological leapfroggingGuerrilla attack;- involves waging small

intermittent attacks to harass and demoralise the opponent and eventually secure permanent footholds. E.g. intense promotional blitzes, price cuts


`

Marketing warfare strategies for Followers

The aim is to avoid the risks and costs of challenging and leading.

Strategy is achieved by the follower imitating the leaders products and services.

Four follower strategies can be distinguished Counterfeiter – duplicates the leaders product and

sells it on the black market or through disreputable dealers e.g. DVDs, CDs, watches

Cloner – emulates the leader’s products, packaging and name with slight variations e.g. computers

Imitator – copies some things from the leader but maintains differentiation in terms of packaging, advertising, pricing etc. e.g. car manufacturers.

Adopter – takes the leaders products and improves on them or adapts them to suit local conditions e.g. Japanese firms


Marketing warfare Strategies for Nichers

The aim is to avoid direct competition with bigger firms & to concentrate on smaller markets & limited products

Requirements for effective niching are;- Deep Market understanding Focus Specialization


STRATEGIC MARKETING PLANNING

Involves the formulation of marketing management strategies that shape the long term well-being of the org.

Matches the org `s marketing capabilities and objectives to the changing environment.

*Why the Need for a Strategic ApproachIncreasing environmental dynamics, complexity

and unpredictabilityTechnological advancementsGrowing organisational size and complexityGrowing competitionChanging consumer tastes, affluence and influenceGlobalization & its implications


Elements of Strategic Marketing (Developing the Strategic Marketing

Plan

1. Defining the Company Vision and Mission2. Situational Analysis3. Setting org `marketing objectives4. Developing Marketing Strategies 5. Implementing the marketing programmes6. Monitoring and controlThe strategic marketing plan is the outcome

of this sequential process.


Growth Strategies in MarketingSince most companies include growth as a

basic objective, one area of strategy development revolves around the question of how growth will be obtained.

A firm `s strategy for growth through product/market expansion is based on how it matches its product development and the market position as highlighted in the Ansoff Matrix:


Growth Strategies in Marketing:Product/market expansion strategies

The Ansoff Product/Market Matrix


Growth Strategies in Marketing: Product/market expansion strategies

(i) Market Penetration: A growth strategy aimed at increasing sales of existing products in existing markets thru:

(i) altering purchase patterns of existing customers(ii) attracting nonusers to purchase the product(iii) Enticing purchasers of competitors’ products to switch,

thereby increasing market share.(ii) Market Development:A growth strategy which

entails offering existing products to new markets. These markets can be:

(ii) New geographical markets such as foreign countries, or

(ii) new market segments not currently using the productMarketing Management @ NUST 2014

Growth Strategies in Marketing: Product/market expansion strategies

(iii)Product Development: a growth strategy aimed at increasing sales through the introduction of new

products to existing markets. Product development may involve altering existing products by:

(i) adding new features,(ii) offering different quality levels, or() offering different sizes of the product(iv) Diversification(iv) is a growth strategy

alternative where a business markets new products in new markets.

Is an inherently more risk strategy because the business is moving into markets in which it has little or no experience.


End of Course

Thank you so so much,Ndinotenda,Ngiyabonga,Asante sana

!!! for this wonderful journey together.

Wish u the best beyond Marketing Management !!!!


marketing management notes nust zimbabwe 2014

Business

relationship marketing

customer loyalty

new customer

current customer

adisappointed customer

happy customer

business management

production concept